UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: OCTOBER 15, 2002
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(DATE OF EARLIEST EVENT REPORTED)
RF MICRO DEVICES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHAPTER)
NORTH CAROLINA 0-22511 56-1733461
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
7628 THORNDIKE ROAD
GREENSBORO, NORTH CAROLINA 27409-9421
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(336) 664-1233
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
Item 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
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RF Micro Devices, Inc. ("RFMD") has entered into an Agreement and Plan
of Merger and Reorganization, dated as of October 15, 2002 (the "Merger
Agreement"), with Resonext Communications, Inc. ("Resonext"), a privately held
company providing complete, highly integrated CMOS WLAN solutions for 802.11a
and multi-band (802.11a/b/g) platforms.
Resonext provides highly integrated two-chip CMOS solutions for 5GHz
and dual band WLAN platforms. The combination of Resonext's single-chip Zero IF
CMOS radio architecture, AccuChannel(TM) technology and flexible MAC software
provide Original Equipment Manufacturers (OEMs), Original Development
Manufacturers (ODMs), and enterprise and consumer WLAN system providers with
decreased bill of material costs, low power consumption, high performance and
flexibility. Resonext's flagship product, the Resonext RN5200, is an end-to-end
two-chip WLAN turnkey solution with Zero IF implementation. Founded in 1999 by
David Tahmassebi and Morteza Saidi, Resonext is headquartered in San Jose,
California. The company has secured $68.5 million in funding to date from
leading investors, including Bessemer Venture Partners, Norwest Venture
Partners, Oak Investment Partners, INVESCO Private Capital and WK Technology
Fund.
MERGER CONSIDERATION. Pursuant to the Merger Agreement, RFMD has agreed
to issue $133 million in stock, subject to a collar on RFMD's stock price of
between $6.00 and $9.50 per share, for all the outstanding shares of capital
stock of Resonext, including the shares issuable upon exercise of outstanding
warrants and employee stock options. The number of shares to be issued by RFMD
will be determined when the transaction is closed (based on a trailing
20-trading day average price). The minimum number of shares to be issued by RFMD
will be 14.0 million (equivalent to $9.50 per share) and the maximum number of
shares will be 22.167 million (equivalent to $6 per share). The transaction is
subject to the approval of Resonext's shareholders and other closing conditions
and is expected to close during RFMD's current fiscal quarter ending December
31, 2002. RFMD anticipates Resonext will have a cash balance of approximately
$26 million at the time of the closing, and the transaction is expected to be
accretive on a GAAP basis within 12 months of closing. RFMD expects to incur
one-time acquisition charges and subsequent amortization expenses related to the
transaction, and RFMD will detail these expenses upon closing.
LOCK-UP. Each holder of Resonext capital stock receiving shares of RFMD
common stock in the merger will be subject to certain restrictions on such
holder's ability to transfer or establish certain put or call positions with
respect to such shares of RFMD common stock during the Restricted Period (as
defined below) applicable to such holder. Subject to certain exceptions set
forth in the Merger Agreement, during the Restricted Period applicable to each
former Resonext stockholder, such holder will not be permitted to (1) offer,
sell, contract to sell, pledge, grant any option to purchase, make any short
sale or otherwise dispose of any shares of RFMD common stock received in the
merger, or (2) establish or increase a put equivalent position or establish,
liquidate or decrease a call equivalent position within the meaning of Section
16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the SEC promulgated thereunder, with respect to any
shares of merger stock, in any case without the prior written consent of RFMD.
"Restricted Period" will mean (i) 120 days
with respect to RFMD common stock received in exchange for Resonext preferred
stock and (ii) 24 months with respect to RFMD common stock received in exchange
for Resonext common stock. Notwithstanding the foregoing, and subject to certain
provisions of the Merger Agreement, immediately following the effective time,
all former Resonext stockholders may sell up to an additional 1/3 of their
shares of RFMD common stock received in the merger. In addition, beginning 60
days after the effective time, each former holder of Resonext preferred stock
may sell up to 1/3 of such stockholder's shares of RFMD common stock received in
the merger in exchange for such Resonext preferred stock. Beginning twelve
months after the effective time, each former holder of Resonext common stock may
sell up to an additional 1/3 of its shares of RFMD common stock received in the
merger in exchange for such shares of Resonext common stock.
Shares of merger stock issued in exchange for Resonext preferred stock
may be distributed by a stockholder which is an entity to its partners, members,
stockholders or other equity owners and such recipient will not be bound by the
restrictive terms of the Merger Agreement.
Notwithstanding the foregoing, any former holder of Resonext preferred
stock may hedge its shares of merger stock issued in exchange for such Resonext
preferred stock, which will include establishing or increasing a put equivalent
position or establishing, liquidating or decreasing a call equivalent position,
if such transactions are accomplished through a market maker designated by RFMD,
provided that any stockholder who is an employee of RFMD or any subsidiary of
RFMD must comply with any policy adopted by RFMD or any subsidiary of RFMD
generally applicable to its employees regarding hedging, short sales or similar
transactions.
ESCROW FUND. Shares of RFMD common stock equal to $13,300,000 worth of
the merger consideration payable to the holders of Resonext capital stock at the
effective time (including restricted RFMD shares and shares of RFMD common stock
that are not subject to repurchase) will constitute an escrow fund to cover
certain indemnification obligations of the Resonext stockholders (the "Escrow
Fund").
Pursuant to the Merger Agreement, Resonext stockholders agree to
indemnify RFMD for losses and expenses arising from breaches of Resonext's
representations, warranties, covenants or agreements contained in or made
pursuant to the Merger Agreement and for any amount by which the aggregate
appraised value of any dissenting shares exceeds the product of the average
closing price used to determine the merger consideration multiplied by the
number of shares of RFMD common stock that would have been issuable to the
holders of such dissenting shares. Any claim for indemnification of the above
matters must be made before the date that is twelve (12) months after the
closing of the merger.
Before the Resonext stockholders will pay for any indemnification, the
aggregate losses arising from the breach of any representation, warranty,
covenant or agreement or from dissenting shares must exceed $100,000. After the
total amount of such claims has exceeded $100,000, all losses will be subject to
indemnification in full, including the amount of the first $100,000.
Holders of Resonext capital stock will be responsible for their
respective PRO RATA share of any loss attributable to claims subject to
indemnification. The aggregate liability of holders of Resonext capital stock
will be limited to each former Resonext stockholder's proportionate interest in
the Escrow Fund.
Resonext's representations and warranties include representations and
warranties relating to capitalization, financial statements, tax, employee
benefits, environmental and intellectual property matters, as well as other
standard and customary representations and warranties. RFMD has standard and
customary representations and warranties.
CONDITIONS TO MERGER. The obligations of Resonext and RFMD to
consummate the merger are subject to (i) termination or expiration of any
waiting period applicable to the merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and (ii) the absence of
any injunction or other order by a court of competent jurisdiction preventing
the consummation of the merger or any legal requirement making consummation of
the merger illegal, as well as other closing conditions regarding continued
accuracy of representations and warranties, performance of covenants, and
receipt of legal opinions.
In addition, Resonext's obligation to consummate the merger is subject
to (i) the availability of an exemption for issuance of the shares of RFMD
common stock under the Section 3(a)(10) of the Securities Act, or the existence
of an effective registration statement on Form S-4 under the Securities Act
registering such shares, (ii) the listing with the Nasdaq National Market of the
shares of RFMD common stock to be issued in the merger, (iii) the absence of a
material adverse effect on RFMD or its business or any circumstance that could
reasonably be expected to have such a material adverse effect, and (iv)
Resonext's receipt of an opinion of Ernst & Young LLP or its legal counsel
relating to certain tax matters.
RFMD's obligation to consummate the merger is also subject to the
conditions that: (i) Resonext shall have obtained the requisite stockholder
approval for the merger and no more than 10% of the outstanding shares of
Resonext capital stock be dissenting shares, (ii) there be no material adverse
effect on Resonext or its business nor any circumstance that could reasonably be
expected to have such a material adverse effect, (iii) the Escrow Agreement
shall have been executed on behalf of the stockholders, (iv) RFMD shall have
received an opinion of Ernst & Young LLP or its legal counsel relating to
certain tax matters, (v) the termination of certain rights and stock bonus
agreements of Resonext and the execution of transfer documents relating to
certain shares of a subsidiary of Resonext, (vi) there shall be no pending or
threatened legal proceeding by a governmental body seeking to restrain or
prohibit the transactions contemplated by the Merger Agreement, seeking to
obtain material damages, seeking to prohibit RFMD's exercise of its ownership
right with respect to the stock of the surviving corporation, which would
materially adversely affect RFMD's right to own or operate the business of
Resonext or requiring RFMD to dispose of or hold separate material assets, and
(vii) Resonext shall have a certain aggregate cash value in its bank account as
described in the Merger Agreement.
ACQUISITION PROPOSALS. Resonext agreed that it will immediately cease
any and all discussions or negotiations with any persons with respect to any
Acquisition Proposal (as defined
below). Resonext has agreed that it will not, directly or indirectly, (i)
solicit, initiate, knowingly encourage, induce or facilitate the making,
submission or announcement of any Acquisition Proposal or take any action that
could reasonably be expected to lead to an Acquisition Proposal, (ii) furnish
any information regarding Resonext to any person in connection with or in
response to an Acquisition Proposal or an inquiry or indication of interest that
could lead to an Acquisition Proposal, (iii) engage in discussions or
negotiations with any person with respect to any Acquisition Proposal, (iv)
approve, endorse or recommend any Acquisition Proposal or (v) enter into any
letter of intent or similar document or any contract contemplating or otherwise
relating to any Acquisition Transaction. Resonext agreed to promptly notify RFMD
in writing in the event Resonext receives any proposal or inquiry concerning an
Acquisition Proposal, including the terms and conditions thereof and the
identity of the person or group submitting such proposal, and to advise RFMD
from time to time of the status of, and any material developments concerning,
the same.
"Acquisition Proposal" means any offer, proposal, inquiry or indication
of interest (other than an offer, proposal, inquiry or indication of interest by
RFMD) contemplating or otherwise relating to any Acquisition Transaction.
"Acquisition Transaction" means any transaction or series of transactions
involving: (a) any merger, consolidation, share exchange, business combination,
issuance of securities, acquisition of securities, tender offer, exchange offer
or other similar transaction (i) in which Resonext is a constituent corporation,
(ii) in which a person or "group" (as defined in the Exchange Act and the rules
promulgated thereunder) of persons directly or indirectly acquires beneficial or
record ownership of securities representing more than 20% of the outstanding
securities of any class of voting securities of Resonext, or (iii) in which
Resonext issues securities representing more than 20% of the outstanding
securities of any class of voting securities of Resonext; (b) any sale, lease,
exchange, transfer, license, acquisition or disposition of (i) any Resonext
subsidiary or (ii) any business or businesses or assets that constitute or
account for 20% or more of the net revenues, net income or assets of Resonext;
or (c) any liquidation or dissolution of Resonext or any Resonext subsidiary.
TERMINATION AND AMENDMENT OF THE MERGER AGREEMENT. The Merger Agreement
may be terminated and the merger abandoned at any time before the closing
whether or not the merger has been approved by Resonext stockholders:
(i) by mutual written consent of the parties;
(ii) by either party if (A) the merger has not been consummated by
the End Date (as defined below), PROVIDED the terminating
party's failure to fulfill its obligations under the Merger
Agreement is not the reason that the effective time does not
occur by the End Date; (B) any court or other governmental
body has taken a non-appealable final action prohibiting the
merger; or (C) the Merger Agreement and the transactions
contemplated thereby are voted upon by the Resonext
stockholders but are not approved; provided that the failure
to obtain such requisite approval is not attributable to the
terminating party's failure to fulfill its obligations under
the Merger Agreement;
(iii) by Resonext if (A) any representation or warranty of RFMD was
inaccurate on the date of the Merger Agreement or has become
inaccurate such that the conditions to the merger regarding
continued accuracy, in all material respects, of
representations and warranties cannot be satisfied; or (B)
RFMD has breached a covenant contained in the Merger Agreement
such that the condition to the merger regarding performance of
covenants, in all material respects, cannot be satisfied; in
each case such that the inaccuracy or breach is not curable by
the End Date; or
(iv) by RFMD if (A) any representation or warranty of Resonext was
inaccurate on the date of the Merger Agreement or has become
inaccurate such that the conditions to the merger regarding
continued accuracy, in all material respects, of
representations and warranties cannot be satisfied; or (B)
Resonext has breached a covenant contained in the Merger
Agreement such that the condition to the merger regarding
performance of covenants, in all material respects, cannot be
satisfied; in each case such that the inaccuracy or breach is
not curable by the End Date.
For purposes of the Merger Agreement, "End Date" shall mean January 31, 2003;
PROVIDED, HOWEVER, that if on January 31, 2003 (i) (A) any waiting period
applicable to the consummation of the merger under the HSR Act shall not have
expired or been terminated or there shall be in effect a voluntary agreement
between RFMD and the Federal Trade Commission or the Department of Justice
pursuant to which RFMD has agreed not to consummate the merger for a period of
time or a temporary restraining order issued upon the motion of the Federal
Trade Commission or the Department of Justice is in effect precluding the
consummation of the merger, (B) any similar waiting period under any applicable
foreign antitrust law or regulation shall not have expired or been terminated,
(C) any consent required under any applicable foreign antitrust law or
regulation shall not have been obtained, or (D) a final decision has not yet
been rendered by the hearing examiner in the fairness hearing, and (ii) all
other conditions to the merger that are not related to any of the matters
referred to in clause "(A)", "(B)", "(C)" or "(D)" of this sentence shall have
been satisfied or waived, then the End Date shall be March 31, 2003.
VOTING AND PROXY AGREEMENTS. In connection with the execution of the
Merger Agreement, RFMD has entered into irrevocable proxy and voting agreements
(the "Voting Agreements"), with certain principal stockholders of Resonext who
collectively hold Resonext common stock and/or Resonext preferred stock
representing in excess of 50% of the voting power of Resonext (calculated on a
fully-diluted basis).
Each Resonext stockholder executing a Voting Agreement has agreed that
all shares of Resonext common stock and Resonext preferred stock, if any, owned
by such stockholder as of the record date fixed for such meeting shall be voted
in favor of: (i) the approval of the Merger Agreement and the approval of the
principal terms of the merger; (ii) the amendment of Resonext's Certificate of
Incorporation and Bylaws providing for the merger consideration to be
distributed in accordance with the terms of the Merger Agreement; and (iii) each
of the other actions contemplated by the Merger Agreement. Further, each
stockholder executing the Voting Agreement agrees to execute any written consent
seeking merger approval solicited by or on behalf of Resonext. On all matters
other than those described in clause (i), (ii) or (iii) of this
paragraph, stockholders will retain at all times the right to vote the
stockholder's shares in the stockholder's sole discretion.
The Voting Agreement further provides that during the term of the
Voting Agreement, the stockholders will not: (i) solicit, initiate, encourage or
induce the making, submission or announcement of any Acquisition Proposal (as
defined above and in the Merger Agreement) or take any action that could
reasonably be expected to lead to an Acquisition Proposal; (ii) furnish any
information regarding Resonext or any direct or indirect subsidiary of Resonext
to any person in connection with or in response to an Acquisition Proposal or
inquiry or indication of interest that could lead to an Acquisition Proposal; or
(iii) engage in discussion with any person with respect to any Acquisition
Proposal.
In addition, each stockholder executing a Voting Agreement has also
agreed not to transfer such stockholder's shares of Resonext common stock and/or
Resonext preferred stock unless each person to which any of such securities, or
any interest of such securities is, or may be, transferred will have: (i)
executed a counterpart to the Voting Agreement and an irrevocable proxy and (ii)
agreed to hold such transferred securities subject to all of the terms and
provisions of the Voting Agreement.
Each such Resonext stockholder has also granted RFMD a proxy, which
will be irrevocable to the fullest extent permitted by law, to vote its shares
in favor of the approval of the Merger Agreement, and the other transactions
contemplated by the Merger Agreement; and agreed to cause to be delivered to
RFMD an additional proxy executed on behalf of the record owner of any
outstanding shares of Resonext common stock and/or Resonext preferred stock that
are owned beneficially (within the meaning of Rule 13d-3 under the Exchange
Act), but not of record, by such stockholder.
EMPLOYMENT AGREEMENTS. In connection with the execution of the Merger
Agreement, RFMD entered into employment agreements with certain employees of
Resonext (the "Employees"). Each of these agreements will become effective
immediately at the effective time and if the Merger Agreement is terminated, the
agreements will not become effective, will have no further force or effect, and
will be null and void. Pursuant to these employment agreements, each Employee,
agreed to be employed with RFMD for a period of two years after the effective
time ("Initial Term"), followed by employment on an "at will" basis. Each
employment agreement provides that the Employee will receive a specified
bi-weekly base salary. In addition, each Employee will receive benefits
generally provided to all RFMD's similarly situated employees. Each of the
Employees may be terminated during the Initial Term with or without "just cause"
(as defined in each Employee's employment agreement) or for death or disability.
Each of the Employees may terminate his employment with or without "good reason"
(as defined in each Employee's employment agreement). The employment agreements
have varying provisions relating to payments upon termination.
In connection with the Merger Agreement and in the sale of his shares
of Resonext common stock and/or Resonext preferred stock to RFMD, each Employee
also has entered into an Inventions, Confidentiality, Nonsolicitation, and
Noncompetition Agreement with RFMD.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
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(c) EXHIBITS
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99 Unaudited Pro Forma Combined Financial Statements
(filed in connection with disclosures provided
pursuant to Item 9)
Item 9. REGULATION FD DISCLOSURE
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On October 29, 2002, RF Micro intends to file with the Department of
Corporations of the State of California an Application for Qualification of
Securities pursuant to Section 25121 of the California Securities Law and a form
of Notice of Hearing pursuant to Section 25142 of the California Securities Law.
The Application will include unaudited pro forma combined financial statements
of RF Micro and Resonext Communications, Inc. which have been prepared on a
preliminary basis to give effect to RF Micro's acquisition of Resonext as a
purchase transaction. These financial statements also will be provided to the
shareholders of Resonext when Resonext solicits their approval of the
acquisition.
THE TOTAL COST OF THE ACQUISITION HAS BEEN PRELIMINARILY ALLOCATED TO
THE ASSETS THAT WILL BE ACQUIRED AND LIABILITIES THAT WILL BE ASSUMED BASED UPON
THEIR RESPECTIVE FAIR VALUES AS DETERMINED THROUGH PRELIMINARY APPRAISALS AND
INTERNAL ESTIMATES. THE ACTUAL ALLOCATION OF THE PURCHASE PRICE, AND THE
RESULTING EFFECT ON INCOME, MAY DIFFER FROM THE UNAUDITED PRO FORMA AMOUNTS
INCLUDED HEREIN ONCE THE ACQUISITION IS CLOSED AND AN INDEPENDENT FIRM HAS
COMPLETED THE FINAL VALUATION ANALYSIS.
Upon consummation of the transaction, RF Micro will include unaudited
pro forma combined financial statements of RF Micro and Resonext as an exhibit
to its Current Report on Form 8-K which RF Micro will file in accordance with
Items 2 and 7 of Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RF Micro Devices, Inc.
By: /S/ Barry D. Church
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BARRY D. CHURCH
Corporate Controller
(Principal Accounting Officer)
Date: October 29, 2002